In an era focused on international free trade, it seems incongruous that Canada has so many internal barriers that impede movement of goods, services and people between provinces. That’s a situation that has to change if the country is going to stay competitive in a global marketplace, says Perrin Beatty, a former Conservative cabinet minister who is now president of The Canadian Chamber of Commerce.

Canada Competes

A major drop in the price of oil could lower the standard of living in Canada, so the federal and provincial governments should increase productivity to make economic growth less dependent on commodity prices, says Peter Jarrett, head of Canadian economic analysis at the Paris-based Organization for Economic Co-Operation and Development. In the following slides, he offers three areas where productivity could be boosted.
Associated Press

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Businesses are operating today in an intensely competitive global economy. It is important for them to have a market at home in which they can build their scale. We are a comparatively small economy to begin with, and if we Balkanize our economy and turn it into 13 regional ones, then it is much more difficult for Canadian companies to get the scale that they need to be able to be globally competitive.

Also, from the perspective of Canadian consumers and customers of businesses, it limits choice and drives up costs.

What are some of the worst barriers?

Try driving a big truck across Canada and you will discover very quickly the layers of regulation you have to deal with as you move from jurisdiction to jurisdiction. All of these layers create barriers to doing business across the country.

We [also] have impediments that may make it difficult, at a time of high unemployment, for workers to move from one area to another where their skills may be in demand. They have to be relicensed to offer their skills in another jurisdiction.

You can see [barriers] in local preferences given in bidding on contracts for governments. There may be discrimination against bidders from out of a region or out of a province.

The most celebrated case recently was that of wine, where Parliament finally intervened to say, ‘Yes, we should allow interprovincial wine sales.’ [But] provincial wine monopolies are dragging their feet on this, and we still don’t have an open market. This clearly makes no sense.

This is all self-defeating. It drives up costs and it enshrines inefficiencies in the system. It builds costs into the economy. The government of Alberta estimated a few years ago that the costs [of interprovincial trade barriers] could be as much as $14-billion a year to the Canadian economy.

How damaging are the barriers that diminish labour mobility?

In instances where you have to be certified to offer a service in a particular jurisdiction, a Canadian who has a skill in one region of the country has difficulty in moving to another region, and taking up a job that may be open – particularly jobs that may be open for the short term. [That is damaging because] what we are seeing is not a shortage of bodies available to work, but a mismatch between the skills that are available and the demands of the work force. We need to make it easier for people to move within Canada and put their skills to work. That will bring down costs and also help reduce unemployment. If we can move people off employment insurance or off welfare and on to the job rolls and tax rolls, everybody benefits.

What role do agricultural marketing boards play in this issue?

[The main issue is the] quotas, which assign what production is allowed to be sold. Obviously, anything like that interferes in the market system. It says that some people will not be allowed to sell, based on residency.

How have provincial trade barriers changed over time?

One of the reasons for the creation of Canada was the abrogation of reciprocity with the United States. When we no longer had access to that U.S. market, the Canadian colonies came together and they struck an agreement that was designed in large part to ensure free trade within Canada. Section 121 of the constitution is quite clear in saying there should be no duties or impediments put in the way of trade within Canada. So the clear intention of the founders of the country was to have a single market in Canada.

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